Incentives make solar affordable

Brendan O'Connor, born in Ireland, says he found a pot of gold on the sunny roof of his West Boylston Street restaurant when he installed 32 solar panels there four years ago.

The $42,000 project at the 23-year-old O'Connor's Restaurant and Bar has already paid for itself — thanks in large part to federal and state incentives — and will continue cutting his electric bill for years.

“I would do it over again. I think we are saving five to six grand a year. It was a good investment. Gasoline costs are totally out of our control, but what is in our control is something like solar power,” he said.

The Limerick native was an early participant in an accelerating move by businesses toward solar power. Even today, other business owners ask him how it worked out. And today, they may get an even better deal than he did.

A variety of incentives are available, and, together with cheaper, more efficient solar panels and rising competition among installers, they are leading more businesses to put sunlight to work.

State officials are backing solar energy and other alternative energies including wind power, setting up the Massachusetts Clean Energy Center to spotlight the opportunities.

“Solar electricity is really accelerating at a dramatic rate,” said Andy Brydges, MassCEC senior director of renewable energy generation. “The incentives for it in Massachusetts are relatively recent, within the last year, and it is a market we anticipate will grow dramatically.”

The payback time on solar electricity has dropped recently, as the manufacturing costs for photovoltaic equipment have plummeted worldwide.

People who had looked at photovoltaic three or four years ago are now finding it is a very attractive investment.

“States like Massachusetts are putting in place some very aggressive incentives to accelerate and build the industry,” Mr. Brydges said.

The incentives can conceivably pay about 70 percent of the installation costs of a system. The federal tax incentive alone can take 30 percent off the cost.

“It drives down the cost of the system right off the top, when you file your next tax return,” he said.

Businesses considering solar should obtain at least three bids and do research to get the best deal, he said. Some complicated incentive programs involve selling electricity back to utility companies, and assumptions about future market rates can vary.

“Work with an installer and say you want conservative assumptions. And where they have made assumptions … decide if you agree. By comparing multiple bids, you can usually pin down the variances and come to a decision,” he said.

Edward R. Whitaker, chief executive officer of Second Generation Energy in Hopedale, said businesses eyeing solar must first understand how to pay for it and its potential benefit. Issues include whether there's a good sunny place (such as Mr. O'Connor's large flat south-facing roof) to put the panels, he said.

“If you have a small building and are an energy intensive industry, there's going to be a small offset. Likewise, if you have a warehouse, you're going to have a large offset,” said Mr. Whitaker.

Another major issue is the availability of solar renewal and energy certificates. Utilities must generate a percentage of their electricity through solar, and the certificates allow photovoltaic system owners to sell it to them.

SGE installed the system at O'Connor's Restaurant and Bar, as well as a small one at the First Unitarian Society church in Franklin, and large ones on the roofs of Dan's Jeep in Westboro and Westborough Mitsubishi.

Mr. Whitaker said manufacturers' prices for panels have dropped by 75 percent compared to 2008, and complete systems can cost half of what they did back then. The federal tax credit will be in place until 2016, but faster depreciation on systems ends this year.

“The payback period usually falls into the four-to-six-year period, and panels have a 30- to 40-year expected lifetime and a 25-year warranty,” he said. Solar system inverters, a component that converts solar power into alternating current, can fail in about 15 years, he said.

Similar payback estimates have been made at a 364-panel installation at NorthStar Construction Services, a roofing contractor in Shirley. Estimates are that the system, installed by SouthPoint Solar of Leominster, will pay for itself in four years.

Businesses needing help paying installation costs can seek a loan from a bank or other entity. The Massachusetts Development Finance Agency has a “green loan” program. Applicants must have been in business for at least five years, be able to repay and have qualified for utility rebates or a subsidy.

Business-related installations come in many sizes and types.

In Barre, the Honey Farms convenience store chain recently had Quabbin Solar build an 18-acre solar farm in lieu of building smaller facilities at each of its 36 stores. It will gain savings from National Grid on its electric bills at many stores through the state's incentive program.

Mr. Whitaker's company is planning a project on the South Shore involving two businesses. One company wants to invest in a rooftop facility, but has no building. The other owns a building, but lacks funds to build a facility.

“Client No. 1 is going to build on the facility and sell the electricity, and client No. 2 will get the electricity at a discount. They have partnered up,” he said.

He suggests customers check if prospective installers are certified by the North American Board of Certified Energy Practitioners. He also favors Massachusetts-based companies.

“We are a local company, we were founded here, we are based here and everybody that works for us lives here,” he said. Customers should also beware of poorly made solar panels used by some companies, he said.

Mr. O'Connor said energy needs were once a huge expense for his restaurant.

“It was something we had to do something about. There are a lot of people just trying to survive in business, but this is one (area) where you really have to have faith and bite the bullet and go for it,” he said. As it turned out, the state and federal incentives dropped his share of the costs to about only $10,000.

Today, the solar industry is more sophisticated than it was in 2008, and is offering better products, Mr. O'Connor said.

“There are far more choices out there than there were at the beginning. It was a learning curve for the consumer, National Grid and the city, and now people know what to expect,” he said.